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My Plan to Address Recession Driven Budget Deficit

Yesterday I released my proposed budget for the next 18 months, a budget that will close our projected $179 million deficit now rather than waiting until June 2010.

By adopting this budget, which would take effect January 1st, we will keep the City on a steady course, preserve the pace of our financial reforms, and prevent deep service cuts that would do unnecessary and perhaps irreparable harm to our quality of life.

Like virtually every city in America, San Diego has been hammered by plummeting revenues because of the national recession, and by the poor performance of the stock market during the last fiscal year, which caused our pension costs to skyrocket due to investment losses.

By taking decisive actions now, the City will avoid cutting an additional $24 million from City services in June. This City Council is no stranger to making tough decisions – and I’m confident they’ll do what’s right .

We could have balanced this budget by taking drastic steps that would have included closing some 20 fire stations and laying off hundreds of police officers and firefighters.

But this would have been unacceptable – to me, the City Council and the vast majority of the public.

Instead, we’ve balanced this budget in part by making one-time cuts that total $96.5 million, and $82.6 million in ongoing structural solutions, continuing the important progress we have made toward building a City government that lives within its means. All in all, we’ll eliminate some 530 positions – about 200 of which are filled.

The result is a budget that remains faithful to five critical goals:

-First, to fully pay our ARC, the annual required contribution to our retirement system.

-Second, to continue our commitment to making public safety our top priority by avoiding layoffs of sworn officers in the Police and Fire-Rescue departments.

-Third, to prevent the decimation of public services and preserve our quality of life.

-Fourth, to equitably spread the reductions throughout the City.

-Fifth, to protect our current reserve balances -- and thereby protect our ability to continue accessing the bond markets at affordable interest rates. Because in these challenging economic times we need to get the best deal possible for the City.

I’d like to point out that you won’t find anything in this budget that concerns the job-generating projects the City is studying, such as building a new Main Library, replacing our Civic Center, or helping the Chargers build a new stadium downtown.

That’s because these projects do not involve money that we could use for citywide services.

If they don’t get built, we won’t have one more dime for City operations -- but we will have lost millions of dollars in outside funding, some of which will go to other regions.

Nor is there anything in this budget about renegotiating pension benefits, and for one simple reason: Renegotiating vested benefits is not a legitimate option – certainly not in the real world. Case law is absolutely clear: It would be illegal to renegotiate those pension benefits without giving back to our employees as much money as we took away from them in negotiations.

Addressing a financial challenge of this magnitude requires a commitment from everyone involved to put the City’s interests first.

This budget is an essential step toward fulfilling that goal.